CANADA FX DEBT-Canadian government bond yields hit 2-year highs

Mon Aug 19, 2013 4:47pm EDT
 
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* Bond prices mixed, lower across long-term end of curve
    * Fed minutes, Canadian retail sales, CPI in focus this week
    * C$ at C$1.0342 vs US$, or 96.69 U.S. cents

    By Solarina Ho
    TORONTO, Aug 19 (Reuters) - Prices for Canadian government
debt were lower across longer end of the maturity curve on
Monday as the markets waited for further direction from the U.S.
Federal Reserve's policy meeting minutes, retail sales and
inflation data later this week.
    The two-year bond slipped half a Canadian cent to
yield 1.221 percent and the benchmark 10-year bond 
fell 23 Canadian cents to yield 2.743 percent, its highest yield
in more than two years.
    Yields on the Canadian government's 20-year and
30-year bonds also touched the highest levels in
more than two years.
    Meanwhile, the Canadian dollar has been mostly pushed and
pulled by U.S. data and Federal Reserve commentary and was
little changed against its U.S. counterpart.
    Minutes of the Fed's most recent policy meeting due out this
week are expected to provide better clarity on when the central
bank will begin to scale back its stimulus program.  
    "Realistically, we're waiting for the next major Fed move
and we'll follow the market. It's not about Canada, it's about
everything else," said John Curran, senior vice president at
CanadianForex. "It's range-bound until further notice."
     The Canadian dollar finished its North American
session at C$1.0342 vs. the greenback, or 96.69 U.S. cents,
nearly flat from Friday's session finish at C$1.0339, or 96.72
U.S. cents.
    Domestically, analysts are expecting Canadian retail sales
to fall 0.4 percent and inflation to grow by 0.2 percent. Retail
sales is due on Thursday and inflation is due on Friday.
 
    "It's really a case of the markets waiting...on the Canadian
data, in particular, retail sales and CPI," said Shaun Osborne,
chief currency strategist at TD Securities. 
    Osborne expects the currency to trade between C$1.0250 and
C$1.04 over the next few days.
    The Canadian dollar was underperforming most major
currencies, but outperforming its commodity counterparts, the
Australian and the New Zealand dollars.